Strategic Change

First appeared in ‘CEO Refresher’ (U.S.A.)

Change, change, change. There seems to be so many change programmes, change initiatives, strategic transformations, right-sizings, administrative reforms, re-engineerings, reorganisations these days that you’d be forgiven for thinking that this had been totally done to death now and there was no way you could cope with any more. Unfortunately not. Change initiatives are not going away – they’re coming thicker and faster than ever.

So what do you do about it? There’s one tried and trusted option I learnt from a senior manager in the Civil Service; “Keep your head down”. This seemed to work for a while. Statistics suggest that 80% of change initiatives fizzled out within six months. However it’s becoming less and less of an option now as there are fewer people to hide behind. The only thing to do these days seems to be to stay ahead of the change. As a manager you have a slight advantage over your staff, in that you’ll (usually) know what’s about to happen before them. This can be extremely useful, as we’ll see later.

You need to manage it effectively is what you need to do. If you are the initiator you need to make sure it happens. You need to truly understand the benefits of the change and sell them to all the stakeholders – especially your staff. If you aren’t the initiator but are the one that has to make it happen, i.e. a manager, this applies twice as strongly. As a manager in an Organisation you have to get things done you may not necessarily agree with. In fact there will be times, as you know, when you’ve had to do things you definitely don’t want to do. Ah well. What can you do? You take the corporate money at the end of the month so you need to toe the party line now and again. I’m not suggesting for one minute that you have to accept and agree with everything ‘they’ throw at you. On the contrary you have to argue, negotiate, influence, cajole to try to get your ideas implemented. However, if you lose I don’t see a great deal of point going half-heartedly at the decision and ensuring no one wins. (Unsurprisingly this happens a great deal). No, once the battles are over it’s cabinet responsibility and you have to do your best to make it happen.

There’s a nice little four step plan based on some work by Costas Markides I would recommend. I like it because it’s simple and it works. You can also add a variety of your own bits and pieces to it which gives it flexibility and your own feel to it. The stages are;

1. Rational acceptance

2. Emotional acceptance

3. Light 1000 fires

4. Support

Seems straightforward enough. It’s one of the few models I’ve seen that seems to recognise there’s a difference between hearts and minds and you have to appeal in different ways to each aspect. You start with peoples’ minds.

You start by selling them the benefits. You need to do the sums and show them that the end result is an improvement somehow. Either in terms of hard cash, quality of work, standard of living, self improvement or something. If you can’t do this then you’d better be asking yourself some hard questions. Why are you imposing this change then?

Take time to work through this. People, being people, are a lot like you and me. We tend not to like change for many, many reasons – all to do with being vulnerable. They will have vulnerability about losing their job, their self-esteem, their comfortable way of life and many other things you can’t even think of right now. So once you’ve spelt out all the changes, rationally, analytically – drawn maps, used Gantt charts, analysed the costs, looked at all the logical business you need to dig a little deeper.

Try this with your team; at the end of a team meeting, or some occasion where they are all together, ask them a question;

“You have a cake and can make 4 cuts. What are the most pieces you can have? You have 3 minutes to work this out.” There are no tricks.

After a minute and a half stop them. Invariably they’ll be many of them really concentrating and slightly annoyed that you’ve stopped them. Tell them you’ll let them complete it later but for now ask them what would be the most effective way they could have solved this. After a number of ideas you should have a good list. Ask what the most important reason on the list is. I bet it’ll be that they should have worked as a team. In this exercise 99 times out of a 100 people try to complete it on their own. Ask them why they didn’t work as a team. You will get some answers pointed at you – “You didn’t tell us to.” “You said we couldn’t”. Eventually you’ll start getting to the heart of it.

It’s to do with conditioning. People have had 30, 40, 50 years of working on their own. In school if you collaborated it was called cheating. At an interview you’re not allowed to take a friend. You can explain that n this environment it’s OK to help each other. Let them now complete the task and they’ll find they get a much better result (answer below).

In a similar vein you’ve got to deal with each barrier that gets in the way of people changing. These changes may often appear small or silly (“I didn’t know it was OK to work as a team”) but they do stop change happening. Rationally dealing with all these barriers takes time. However, if it’s not done you know what will happen don’t you? The change either wont work or it’ll work but be half-hearted with people still going on about the old days and the old system.

In a Government Office I once worked at I saw a huge red book with hand written details of certain aspect of marriage regulation. Someone was methodically and painstakingly writing twenty or so new entries.

“Some job.” I said “I bet you’ll be glad when the regulation changes and you can just use computers?”

“Oh there’s nothing in the law about this” was the reply, “We just do it.”

“But why? Isn’t the computer system up to it?”

“Oh yes – it’s a print off from the computer I’m using to copy from.”

“So why are you doing it?”

“Because we’ve always done it this way.”

At the same time as winning their rational acceptance for the change you’ll need to start winning their emotional acceptance. Even if people rationally accept the change and you’ve eliminated all the barriers – you’ve still got to win their hearts.

There’s a superb illustration of this by Adams, Hayes and Hopson called the Coping Cycle. It’s to do with the various stages people go through in times of change.

The premise is that we all go through these stages in times of change. Some of the changes we go through take the blink of an eye to go through – others take years, or maybe we never reach internalising.

Getting people through the defence and denial stages is difficult. Many of the people you need to change may well have invested a great deal of time and energy in the old system and here you are coming along and destroying it. Suddenly all the problems with the old system seem to have disappeared. People are finally accepting and using the old system really well. You’ll even notice an increase in efficiency and self-esteem. This, of course, is further ammunition for the “Why do we need to change. Things are working perfectly” and the “change for change’s sake” factions. The old system may well be working better, but it’s because people are now putting more effort into it. Left to their own devices people would stay here forever if they could (huge generalisation I know, but has lots of truth behind it).

There are many stories of people in defence and denial mode, my favourite was from a colleague who was a tax inspector in Wales – He used to go around West Wales inspecting betting shops and ensuring they had paid the correct amount of tax.

One day in 1976 he was working way up the Swansea valley visiting a small village (well more like a wide spot in the road) called Abercwmtoch – a few houses, 2 pubs, a church and a betting office. In the betting office he looks through the tickets and sees all sort of strange things; 2 shilling each way bets, 6d wins, 2/6 yankee. Bearing in mind this is 1976 – 5 years after decimalization, It hasn’t quite reached Abercwmtoch yet.

“Ah that new fangled decimalization” you can hear them saying “It’ll never catch on.”

I wonder if they’ve changed now.

At this stage there’s a lot of anger and blame – people are vulnerable. Eventually once it’s accepted and they have the new system it gets worse;

“It’s different”,

“It doesn’t do what we want”,

“You can’t even run that report we used to run”,

“It’s too slow”,

“It’s too quick”,

“I told you it was rubbish”.

People need more training, more listening to, more involvement. This stage is often referred to as ‘the pits’ – you can’t get any lower. Eventually people start getting used to it and things start working – easier, faster and you start hearing.

“I wish we’d had this last year”,

“You can even run that report we used to run”,

“I told you it was a good idea”,

“Can we have it in red?”

This coping cycle is excellent to help see what stage people are at and then help them through that stage. It’s that old, old thing I know but you’ve got to communicate with people. Tell them consistently what’s happening. Tell them if there’s nothing happening. No communication form the centre = communication on the grapevine. That’s how rumours start.

The next stage involves lighting one thousand fires. This is to do with letting go and empowerment. This is a brave step. It takes a very mature leader, or manager. They have to trust their staff. It’s still the manager’s fault if things go wrong – it’s delegation not abdication, and they have to let the staff take the credit when things go well.

“That’s anarchy” you say.

It’s not really. You as the manager, have to set the limits and let the people go. They need to know 2 things – the aim (measurable targets in terms of output, cost, time, etc.) and the parameters (what are they allowed to do / not allowed to do). Then off they go. You’ll be surprised at how much ingenuity, collective wisdom your people have.

The final aspect is support. This is the support you need to give your staff – clear, total and transparent. It’s a matter of trust and acceptance. You know there will be mistakes along the line. How do you deal with those mistakes – do you learn form them or do you punish people with them. You know the answer to that one.

Talking of answers – the cake puzzle. Generally people go through a number of stages in solving this;

Stage 1: 4 equal cuts 8 parts

Stage 2: 4 unequal cuts 10 parts

Stage 3: Then, a light bulb moment and someone realises it’s a cake (a 3 dimensional object) and they make 3 cuts on the surface then a horizontal cut to get 14 parts. They then tend to look snug for a while.

Stage 4: Someone really realises it’s a cake and cuts it in half, puts the one half on top of the other and cuts it again. Then they put the four pieces in a pile and cut through it again and so on – giving 16 pieces in total.

Depending on whether someone has asked about the shape of the cake and you’ve said “a round cake” you can give the stage 5 answer – “any number you like”. If the cake were from a child’s birthday party and the child liked caterpillars (it does happen) and the person baking the cake had baked a sponge body with 20 sugar legs you could cut the cake horizontally and have lots of pieces.

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The Importance of Being Memorable

First appeared in ‘Across The Board’ (U.S.A.)

Great leaders have stories, legends, myths about them. These tales may be totally true, based on some truth, or purely wishful thinking, but it doesn’t really matter: They inspire people. If you’re a CEO for a billion-dollar company, you need to be noticed. Your employees will want stories to tell about you. They don’t want to be led by faceless accountants (no offence to faceless accountants). However trite it sounds, actions really do speak louder than words.

There’s the example of a British CEO who took charge of a confectionery company that was in serious financial difficulty. His first act was to cut the tails off the mouse-shaped candies. What an incredible symbolic act-with one gesture, he demonstrated the ruthlessness he was going to show to turn the company around.

There’s the story of Michael Grade, then controller and now director-general of BBC One. Visiting the news department one day when they were short-staffed, he acted as a junior researcher to cover a shipwreck story, finding a member of the coast guard to interview. People at the BBC still talk about that today.

You can have the world’s best mission statement talking about teamwork, respect, and treating people as equals, but until you demonstrate it, it’s just words. Bill Gates illustrated this theory in Microsoft Germany. Most German industries operate in a very formal manner, but this memo, on Gates’s instruction, told employees to use the informal German word for you, Du, instead of the more formal Sie. This very small act was highly significant in motivating the employees and encouraging them to recognize a more egalitarian way of working.

Making a statement doesn’t have to involve a grand gesture. James Dyson, founder of the vacuum-cleaner company Dyson, created a superb environment for his staff-subsidized restaurants, no memos, no shirts, no ties. The story that sticks in my mind, however, is what new employees have to do on their first day: Everyone-whatever grade, whatever salary-has to build a new vacuum cleaner themselves and can then buy it for £5. In a similar vein, Edward Guinness, head of Guinness brewers, publicly recalls his first day in overalls and Wellington boots, cleaning out huge beer vats. These examples allow all employees to see their leaders as human. There are a number of television shows at the moment that show leaders getting their hands dirty: Executives are filmed spending a week on the shop floor, delivering products, selling burgers. Aside from being great TV (and great publicity), it’s a way to get employees to respond to the leaders. You can see their newfound respect for their bosses.

On the more serious side, there are a number of acts that organizations make in times of crisis that allow them to stand out from the crowd. In Liverpool, England, the Littlewoods Organization, a mail-order company that is the largest family-owned business in Great Britain, sent each employee called up to fight in World War II a personal letter guaranteeing him a job upon his return. These letters became legendary. During the Depression, Levi-Strauss CEO Walter Haas kept employees working when there was no meaningful work for them. Malden Mills CEO Aaron Feuerstein continued to pay the company’s 2,400 employees after a devastating fire that practically ruined the business. These stories live on in the minds of employees and customers in a way that advertising can’t. They engender tremendous loyalty.

Often in organizations, individuals make the difference. Their values permeate the company, and their acts say more than a hundred mission statements ever could. There’s another story of the Littlewoods Organization’s founder, Sir John Moores, who as a multimillionaire always bought his shoes from his own catalogue. On one occasion, the supplier, knowing whom the shoes were for, sent a handmade pair, with fine stitching and soft leather soles. They were returned with a terse note: “This isn’t what I ordered.”

Other individual stories are legendary: When John Harvey Jones took over at British chemical manufacturer ICI, he moved all of the meetings out of the huge boardrooms and into the offices; Sir Colin Marshall of British Airways attended every session of his customer-care program, “Putting People First”; IBM’s Lou Gerstner was reputed to have unplugged the projector during overlong, convoluted presentations by his executives. These stories appeal to employees, customers, and the media. You cannot buy this advertising. Leaders who are real characters, charismatic and passionate, inspire others by these acts. They take business out of the nine-to-five grind. It gives their employees role models, something to talk about and something to be proud of. It gives employees the freedom to take risks-and that has got to be good for business.

Leadership – When Communication Means Not Talking

First appeared in ‘CIO’ (U.K.)

An aircraft crashes in the jungle. It’s filled with staff from their works’ outing. The survivors get out of the aeroplane – there are 20 administration staff, 3 managers and a leader. The leader disappears. The managers mutter phrases such as “Typical”, “Well what do you expect” and organise the staff into teams. They distribute tools (machetes, knives, etc.) which are luckily available and start making their way through the jungle, cutting down trees, bushes creating a path. Suddenly they hear a shout “Stop”- it’s the leader. The managers look around – there’s no sign of her. They continue motivating and encouraging their teams. Again they hear a shout “Stop”. One of them looks up and sees the leader in the tallest tree. The managers go to the foot of the tree and listen. The leader is pointing in the opposite direction;

“You’re going in totally the opposite direction” she calls down,

“Shh” one of the managers answers “They’re working really well”.

*****

Three months ago I spent 25 minutes at a conference the other day with a Senior manager who I’d never met in my life before – and would never like to meet again I hasten to add. He talked for 23 of those 25 minutes about…. himself. I listened.

I saw a colleague of his last week. The chap I was with at the conference told this colleague that I was one of the most interesting chaps he’d ever met!

There’s a lesson there I guess. I once worked for a boss who was not the most dynamic person ever, not the best speaker in the world nor was he ruthless in an Adolph Hitler / Bill Clinton / Margaret Thatcher way. However we would all do anything for him. Why? I guess it was because he always had time for you. He always asked about your family, what was important in your life. Every day he was in our office he spent the first 30 minutes “working the room” – not in a manipulative way, but in a genuine way. He invariably missed his first meeting of the day as he would insist on doing this without fail. As I say we would have died for him.

Compare that with another way of “working the room”. A senior manager came along to speak on a training program. Before he was due to speak we chatted;

“Any of my people here?”

“Two I think” I replied

“Oh, who?”

I told him who they were. Blank look. He had no idea who they were.

“Where are they sitting?”

I told him.

He walked in – walked straight over to them “Hi Annie, Hi Rita Great to see you again.”

They beamed. They were absolutely thrilled that a senior manager earning ten times as much as them had remembered their names.

Well they were until he left and I explained to them how he had manipulated the situation.

To talk or not to talk – that’s the question?

As a leader you can be quiet or loud, it seems to me but whichever route you choose you’ve got to treat your people with care and respect. There was a survey carried out a few years back asking staff what quality they admired most in their leaders. The result was surprising, well to me at least it was. The top quality was ‘honesty’. Interesting, eh?

The top business leaders I’ve come across have one surprising quality that I barely noticed at the time but becomes more obvious more idiotic leaders you work with. This is a quality about treating people (all people) especially their staff (all their staff) with total respect and never making them wrong.

I’ll explain. Maybe it’s easier to illustrate this with a negative situation. I’ve seen a very, very senior manager in the Civil Service throw his laptop computer at the head of the multi-million pound Computing section exclaiming “What can I do with this piece of shit. You told me you’d fixed it last week and nothing’s changed. Take it away!” (I’ve removed the expletives).

I understand his frustration. To many in the Office he’s a hero – someone who won’t take crap from anyone – but I do wonder. Someone once said “Don’t make someone wrong. If you make someone wrong they’ll get you back.” Humans, unlike other animals, hate being wrong. It’s the second most potent drive – so I’ve been told. This was illustrated to me by an (allegorical?) experiment involving rats and humans. This is where you place a rat in a T box at the bottom of the T and put some cheese in the left hand corner of the top of the T (got it?). The rat goes to the cheese and eats it. This experiment is repeated a number of times until the rat gets the idea. Next the cheese is moved to the right hand corner. The rat goes to the left hand corner – sees no cheese then goes to the right hand corner. Sensible. Imminently logical.

Bring in the human. Repeat the experiment until the human gets the idea about where the cheese will be (left hand corner). Then move the cheese to the right hand corner. The human goes to the right hand corner -sees no cheese and sits down. He waits and waits and waits thinking “Someone screwed up – and it’s not me.” Humans hate being wrong. I’m sure the Head of Computing Section will get him back – sometime, somewhere. Life has a habit of working out like that don’t you think?

The best leaders don’t do that. They don’t make people wrong. They go out of their way to let people ‘lose’ with dignity. They invent ways out for them – even their opponents. You never know when you might meet them again.

A colleague relates the story of his stressful day going for an interview. He was driving along – quite stressed when someone cut him up. He overtook to see a little old lady – totally oblivious to him. Without swearing – he said nothing to her. Of course you’ve guessed who was chair of his interview panel.

There are, of course, many other aspects to leadership. There has to be some charisma – some inner confidence, even a touch of arrogance in a person to inspire others. Now if you could just bottle that it would be something. However I truly believe trust, respect and honesty are as important to leaders as that charisma.

I once made some ridiculous, offensive remark about the intelligence of a certain group of individuals – computer programmers. Someone, rightly, got really upset and irate. My boss defended me totally saying things like “In this business (management development) you think need to think on your feet… learning the ropes ….you can’t be sure what you’ll say all the time… it’s to do with the intent not the words… etc. etc..” and calmed the situation.

As we chatted later I explained that I hadn’t realised how difficult it was and that my intent was, obviously, true and I agreed with everything he said. He looked at me and smiled “You do anything like that again and I’ll have your balls for paperweights”

Leadership and Personal Impact

First appeared in ‘CEO Refresher’ (U.S.A.)

There are some people who walk into a room and you can almost feel the energy levels in the room double. Other people walk into a room and the temperature seems to decrease a degree or two. What is it that gives certain people that particular brand of authority?

How do you define this indefinable feeling of warmth, charm, personal impact a person just ‘has or hasn’t got’?

A lot of people use a single word to hide behind;

Charisma – “Oh, that’ll be charisma, a thing that cannot be bought, learnt or given”,

“Leaders are born, not made”,

“I’m just not a natural leader so what’s the point?”

“It’s just something you’re born with – you’re either lucky or you’re not.” etc., etc.

But as Arnold Palmer famously said when asked about his lucky shots from bunkers; “It’s a funny thing, the more I practice the luckier I get”.

There’s the story of Winston Churchill, one of the best, most ‘natural’ speakers of the last century. Churchill, like so many leaders, was not a natural speaker. Yet in one of his first speeches to Parliament in 1904 he delivered without notes and had to cut short as he become totally lost. He had to sit down in embarrassment. He was quoted as saying that this would never happen again. He prepared relentlessly for every speech after that. For every one minute of delivery he spent an hour preparing. So it wasn’t unusually for him o prepare 30 or 40 hours for one speech.

Although a lot of research indicates that how you say it has more immediate impact than what you say, what you say will be remembered for a great deal longer. So, make sure you’re clear about what you’re saying, especially what your intention is. If your intention is to be helpful and honest, people will forgive many deficiencies in body language, tone, etc. So be absolutely clear what you’re intention is, then check that this is the effect that the others’ take away.

On the whole people are pretty good at picking up intentions. People, being a bit like me and you, are quite clever. We generally know when someone is lying, or “being economical with the truth” or whatever the current acronym is. As a leader however it’s good practice not to totally rely on your good intentions. You may have the best intention in the world but if the audience are not in tune with you they may not recognise this. This could be due to all sorts of reasons – some history with you, previous leaders, something currently going on in the workplace that you know nothing about, etc… If this is the case the effect you have on your audience may not be the same as your intention and you will need to rethink. So, it’s vital that you find out what the effect is as well as being sure of your intention.

The Gerald Ratner story leaps to mind. I’m fairly sure his intention wasn’t to say that his shops were selling rubbish, but that was certainly the effect.

Studies show that leaders appear more powerful by acting as they think leaders should act. “Fake it till you make it” would be one way of describing this process; The more you act like a strong, powerful person the easier it is for people to regard you as this and the easier it is for you to become this.

If you have someone in mind you respect as a role model that makes this process even easier. Copy what they do when they enter a room, answer a question, etc. Suddenly after a few weeks of acting authoritatively you realise you aren’t acting anymore. Within a few more weeks you’ll start adapting and developing your own style.

In terms of public speaking there are a number of simple, straightforward tips that can make a huge difference. From the beginning you’ve got to “take control of the environment” as I think Al Pacino advocates. This means everything you can control you control – the physical aspects; lighting, temperature, drinks, food, numbers, seating arrangements, screen, handouts, etc. etc.

The ‘non-physical’ aspects – introductions, questioning policy, number of slides, timing, your appearance, knowledge of the audience, your preparation, posture, etc. etc.

In a little more detail – ensure you take control of as much of the physical environment as you can, or get someone you really trust and recognises the importance of, to do it.

Don’t be distracted by “Oh, it’ll be OK – it’s the same as last time”. Say “show me” and check, check, check and have back ups for everything.

Also recognise that even done everything you can things will happen that you haven’t thought about. You know this so don’t pretend it won’t. When that fire alarm goes off accidentally, or the police rush in chasing an armed robber, adapt and don’t start thinking about who to blame. Well, not for the time being at least.

The vital part of this is the non-physical aspects;

Make sure you’re introduction (if you’re having one) is correct, and more importantly is what you want. If you’re making a speech in front of 500 people don’t let yourself be introduced with; “Tonight we have someone making their first speech in front at a large audience so please be gentle on them.” Tempting though it may seem to get some audience sympathy it just won’t work.

In a classic experiment two sets of students were given identical lectures and told that the first lecturer was new, and the second an expert. Guess which one received vastly better ratings?

Quick tips;

No ‘death by PowerPoint’ – unless it’s vital (people get bored).

Keep handouts until the end – unless it’s vital (people get distracted).

Practical things to do;

– Stand straight and tall – taller people are perceived as having more authority.

– No leaning against anything.

– Maintain eye contact with a number of people.

– Gear the material to the audience. Mention people’s names – choose people in the group you know, or are popular.

– Don’t talk for longer than you need to.

– If possible allow far more time for questions than speeches.

– The smaller the group the better your message will get across – there are of course practical considerations for this.

There are some leaders who, I admit, do have that special ‘something’. But I guess they’ve worked extremely hard at developing other aspects of themselves, and I really believe anyone can learn to lead. The outside part is easy (well relatively). The hardest part is inside – the intention and the vision. If these are solid then with a fair amount of hard work, the rest will follow.

A Lesson From Abroad

First appeared in ‘E.S.A.E.’ (Europe)

There is one aspect of leadership that rarely gets mentioned, yet it is vital to the success a leader has in building relationships-symbolic acts. Each and every action leaders carry out has an effect on their team. And actions often do speak louder than words.

Great leaders have stories, legends, even myths told about them. These tales may be totally true, based on some truth, or may be purely be wishful thinking, but in some ways it doesn’t really matter. They inspire people. If you’re a leader of a major organization, you need to be noticed.

You have to be charismatic to lead your staff, so they will want to tell stories about you.

Take the example of a British CEO who took charge of a confectionery company, which was in serious financial difficulty. His first act was to cut the tails of the sugar mice. What an incredible symbolic act. With one gesture he demonstrated the ruthlessness he would show to turn the company around.

Then, there’s the story of Michael Grade, then controller of BBC One-now Director-General. He was visiting the news department one day where they were short- staffed. He acted as a junior researcher and covered a shipwreck story. People at BBC still talk about that today.

Another example is from an internal memo issued in Microsoft Germany. Most German industries operated in a very formal manner. This memo, on the instructions of Bill Gates, told staff to use the informal German word for you Du instead of the more formal Sie. This very small act was highly significant for motivating the staff and encouraging them to recognize a new way of working.

On the more serious side, there are a number of acts that organizations make in times of crisis that allow them to stand out from the crowd. In Liverpool, England during World War I, the Littlewoods, the largest family-owned business in Great Britain, sent each employee who was called up to fight a personal letter guaranteeing them a job upon their return. These letters became legendary.

During the Depression, Levi-Strauss CEO Walter Haas kept employees working when there was no meaningful work for them to do. Malden Mills Chief Aaron Feuerstein continued to pay the 2,400 employees after a devastating fire that practically ruined the business. None of these people legally had to do this. It was just the right thing to do.

These instances tell us so much about these people and their values. Often in organizations it’s individuals who make the difference. Their values permeate the company, and their acts say more than a hundred mission statements ever could. These stories are inspirational to the people who work in these organizations. They take business out of the faceless, nine to five, daily grind that it is more often than not. It gives people something to be proud of.

Why Projects Fail To Fly

First appeared in ‘Management Today’ (Australia)

Managing complex long-term projects is difficult, and the results are often less than spectacular. How come we often can’t get project management right?

When it comes to project management, Rod Vawdrey, CEO of Fujitsu Australia, says that generally the technology industry disappoints with its inability to deliver on promised outcomes. He dryly states: “Around 54 per cent of projects don’t deliver on their promise – I am glad we are not in the airline industry.”

A whole range of major projects around the world regularly hit the headlines for being either over budget on expenditure or seriously behind on timetables.

Everything from Olympic Games budget overruns, to Multiplex’s Wembley Stadium delays, to a whole raft of delayed Australian defence force projects indicate that big projects aren’t that easy to manage. Apparently the UK 2012 Olympic Project is already £1 billion ($AUD2.45 billion) over the original bid budget – and counting.

This is not just a media beat-up. The KPMG Global IT Project Management Survey 2005, which combined insights and trends from more than 600 organisations internationally, reported that, generally speaking, projects are not delivering on their promises.

About 50 per cent of the survey’s participants experienced at least one project failure.
In the same period only two per cent of organisations achieved targeted benefits all the time.

Eighty-six per cent of organisations lost up to 25 per cent of target benefits across their entire project portfolio.

The survey found that, to the detriment of stakeholders, organisations are making commitments, but not always delivering on outcomes; and while organisations are getting some value from their IT project investment, it clearly showed that most cannot determine exactly how much.

According to Egidio Zarrella, KPMG Global Partner in Charge, Information Risk Management, many companies do not even try to measure the value of a project, especially across the globe. He says project performance appears to be substandard.
Looking at a range of statistics there are varying estimates of projects that fail. The general estimate is that last year between 60 and 80 per cent of all projects failed to achieve their targets. A typical analysis of IT project failure appeared in The Guardian in the UK in November last year: “This year, the world’s IT expenditure is projected at about $AUD2.3 billion. About one-third of projects fail completely and another third have complicated problems. Those that finish are likely to be completed several months or years late, on average 180 per cent over budget. These figures do not include hush-hush corporate projects or projects started at home.”

The problem seems to be that the next project starts with a clean sheet and a renewed optimism that this time things will be different. “This time” the project will take place in that parallel universe where key staff don’t change roles, project managers don’t find another post in another organisation, and resources are always available when and where they should be.

Organisations from all over the world have had to deal with some spectacular failures.
Paris Euro Disney was another financial disaster. The project itself was initially costed at $AUD3 billion and finally cost about $AUD5.3 billion. Executives seemed to make a number of wrong assumptions based on a poor grasp of the cultural differences. For instance, in the United States the customers stayed longer (four days), didn’t mind that there was no alcohol on sale and were willing to pay higher prices to stay at the Disney Hotels. These and other factors led to a downward spiral and excessive spending to “buy themselves” out of trouble.

So, whilst most projects may not make the list of grand failures there are lessons that can be learnt.

One key element in the sinking of projects is the internal momentum they build. At a certain point the project seems to take on a life of its own and the reason for the project existing seems to become almost secondary.

There’s a three-step approach that can help organisations gain control over projects, especially for SMEs:

1. You need to establish exactly where you are. This sounds so easy and obvious that it’s often ignored. The consequences of ignoring this aspect can be dramatic.

This is an area mostly neglected because assumptions rule the roost here. For instance Paris Euro Disney’s cultural assumptions is a classic example. People assume they know where they are and become so excited charging after the vision that they overlook important details. After all it’s far sexier, more exciting talking about your hopes and aspirations for the future rather than working out exactly where you are now. Yet this is vital. Where exactly are you in terms of skills, resources, etc? Who’s in charge? What are their strengths, weaknesses, etc? What assumptions are you making?

2. The second step is to determine exactly where you’re going. This is your vision. This should be inspirational. You need to take your people with you. Above all the vision must be defined clearly. People need to see the end product, what it will look like and what’s in it for them. As a leader this is probably your number one job. Leaders lead by having compelling visions.

There’s a tale (probably apocryphal) of John F Kennedy walking around the NASA building in 1968 asking a toilet cleaner at NASA what he was doing. “I’m helping to put a man on the moon by the end of the decade,” was the famous answer the President got. Everyone involved in the Apollo project knew where they were going and what their role was. They didn’t need screensavers with the mission statement. They were involved.

3. Imagine the implementation process is the journey. You know exactly where you are and you know exactly where you’re going. So how would you plan on reaching your destination? Well, in a way you can’t. You can’t predict with any certainty what will happen in six months time. What you can do is plan the first few steps as accurately as you can. Then at a certain point you would reassess your position and plan your next few moves. Then reassess and replan. This is the only sensible approach. The danger of not doing this is obvious.

What happens with most projects is that “someone” expects the project to be planned out in the minutest detail for each day of the two, three or four years it takes to complete the project. This has to be carried out before the journey even begins. There will, of course, be stages built in, but each is dependent on the preceding one, which hasn’t been completed yet. Usually finances and other resources are all controlled at the beginning on the best guess. These guesses at resources are inevitably going to be wrong. How can you possibly know how many people will be needed to run an IT project five years from now given the rate of change in this sector?

In other areas, people will leave, new people will arrive, and resources will not turn up, or turn up early, late, and damaged. Everyone knows this, yet we still go along with it and throw in a few “contingency plans”, “risk analysis diagrams” to make us feel better.

Project Failures

If you have these markers in place then you are in a position to evaluate the project and make changes if they are urgent. Take, for example, the great Coca-Cola disaster of 1985. Coca-Cola was determined to beat Pepsi who had run the highly successful “Pepsi Challenge” campaign and brought Pepsi to within five per cent of Coca-Cola’s share. Coca-Cola panicked, dropped the product that had kept them in business for practically a century and launched New Coke. Although most of this process was a disaster they did have the sense and ability to make a complete U-turn in just 78 days. They’re still in business…

The corporate landscape is littered with the wreckage of spectacular project failures – often relating to IT. An article in The Australian in 2004 pointed out that a “rollcall of failed IT projects includes some household names”.

Taking pride of place among them was National Australia Bank’s announcement that it would write off $409 million in value from its key IT systems. In Melbourne , RMIT announced that it would spend $11 million reimplementing a failed enrolment system, while the Crane Group wrote down $28.8 million relating to the failed implementation of software for its Tradelink stores.

Another project that has gone into the “oh dear” annals is the Westpac C90 project of the 1980s, a rather costly example that came in at an estimated $300 million – loss.
To prove that we don’t necessarily learn anything from the past we can now add the Multiplex Wembley Stadium cost and time overrun disaster, the Australian Collins Class submarine project at about $3 billion over cost, the Anzac ship project at over $1 billion, and the Super Seasprite helicopter acquisition at another billion.

Although it relates to IT projects, the KPMG report probably summed it up best when it stated: “How can you make effective decisions when you do not know the project scope, key risks or key assumptions. These are missing in over one-third of organisations…”

Losing the skills

The retirement of up to one-third of Australia’s project managers in the next decade signals a serious skills shortage, according to Australian Institute of Project Management (AIPM) Chief Executive Officer Peter Shears.

Shears urges organisations to plan now to overcome the challenges. He outlines three solutions including a new approach to mentoring by senior project managers; new approaches to skills development to attract and retain talent; and the addition of project management skills to the core capabilities of all professionals.

Why projects fail

There are many reasons why projects fail. Gantthead (2003) lists the top 10 reasons for project failure:

1. Inadequately trained and/or inexperienced project managers;
2. Failure to set and manage expectations;
3. Poor leadership at any and all levels;
4. Failure to adequately identify, document and track requirements;
5. Poor plans and planning processes;
6. Poor effort estimation;
7. Cultural and ethical misalignment;
8. Misalignment between the project team and the business or other organisation it serves;
9. Inadequate or misused methods; and
10. Inadequate communication, including progress tracking and reporting.

$16 billion on the line

When it comes to big projects, the current $16 billion purchase of the Joint Strike Fighter (JSF) takes the biscuit. The Weekend Australian recently reported that the JSF had to be almost fully redesigned. A parliamentary research report questioned the wisdom of purchasing the JSF.

The Defence Department is arguing “contrary to media reporting that the Defence Science and Technology Organisation assessments showed the JSF program flawed, these findings are an example of best practice project management on identifying risk and taking steps to reduce it”. Only time will tell who is right.